EU–China | Brussels seeks solutions to reduce the trade deficit and limit dependence on Chinese imports

EU seeks solutions to reduce trade deficit with China

The European Commission is examining new ways to encourage China to reduce its exports to the European Union, in an effort to narrow the bloc’s trade deficit with Beijing. European Commissioner for Trade Maroš Šefčovič argues that the solution should involve both increasing European exports to China and more effectively managing Chinese imports into the European market.

Brussels seeks concrete results by October

The European Commission is under pressure from member states to achieve concrete results in trade relations with Beijing by mid-October. Two months ago, member states called for the identification of new tools to reduce the EU’s trade deficit with China, estimated at approximately €1 billion per day.

Pressure on Brussels is increasing amid the difficulties faced by European producers in the chemical and automotive industries. Several companies are reducing their operations, closing factories and cutting jobs as a result of competition from cheaper Chinese imports.

Direct negotiations between the EU and China

Šefčovič announced that he will hold a videoconference with his Chinese counterpart, Wang Wentao, in mid-September, ahead of a visit to Beijing scheduled for early October.

At the same time, a team of European negotiators is in China for trade discussions. According to the European Commissioner, the negotiations are difficult, but all major issues are on the table.

“We need concrete results by October”, Šefčovič said, noting that EU leaders are also seeking pilot projects to address China’s production overcapacity.

EU seeks to increase exports to China

As part of this strategy, the European Union aims to increase its exports to China in areas considered less sensitive, such as agricultural products, medical devices and automobiles.

The new approach comes amid rising Chinese imports into Europe and concerns over the impact of subsidies granted by Beijing on competition in the European market.

According to Šefčovič, the increase in Chinese exports cannot be explained solely by economic performance or market mechanisms, which underscores the need for additional measures by the EU.

Possible restrictions on Chinese imports

If negotiations with Beijing fail to deliver the expected results, the EU could make greater use of trade defence instruments and restrict access for certain Chinese products to the European market.

The European Commission is working on concrete proposals, but their effectiveness will also depend on the response from the Chinese authorities. In the absence of measures from Beijing, pressure to adopt stronger trade instruments could increase.

Safeguard measures to protect European producers

Brussels is also examining changes to the way it uses safeguard measures, which allow for the temporary restriction of imports when a sudden increase in imports threatens European producers.

At the beginning of July, the EU applied an updated version of these measures to a range of steel imports from outside the bloc. The decision prompted dissatisfaction among some trading partners, particularly Brazil and China.

Šefčovič described the instrument as effective but tough, adding that European officials are continuing to examine ways to make future investigations faster and better calibrated.

Brussels prepares an instrument to diversify imports

The European Commission is also working on a new “diversification instrument”, designed to encourage companies to source products from alternative suppliers where such options are available.

The objective is to reduce Europe’s dependence on Chinese products in strategic sectors, including critical minerals and green technologies.

Diversifying supply chains, a strategic priority

Diversifying suppliers may increase costs for European companies and consumers. However, European officials believe that these costs could be lower than the losses resulting from a potential disruption to supply chains.

In this context, Brussels is seeking to strike a balance between maintaining trade relations with China, protecting European producers and reducing economic dependencies in strategic sectors.